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    FCI or Depreciation: Which Metric Is Right for Your Facility?

    Understanding the difference between condition-based and age-based asset tracking—and why AssetLab lets you choose both

    October 18, 2025
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    16 min read
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    Financial Planning

    Two Views, One Asset—Which Tells the Right Story?

    Facility Condition Index measures maintenance needs. PP&E Depreciation tracks financial value. Understanding both transforms how you manage—and fund—your facilities.

    The $2.8 Million Disconnect

    June 2023. A municipal recreation director sits in a budget hearing with two completely different facility reports. The facilities team presents an FCI score of 0.18 (Poor), requesting $1.2 million for urgent HVAC and roof replacements. The finance director counters with the audited balance sheet showing $2.8 million in net PP&E value for those same buildings—seemingly suggesting the facilities are in good shape.

    The city council asks the obvious question: "If we have $2.8 million in assets, why do we need $1.2 million in repairs? Are the facilities failing or not?"

    The recreation director couldn't answer clearly. Neither report was wrong—they were measuring completely different things. FCI tracked physical condition and maintenance needs. Depreciation tracked accounting book value for financial reporting. Without understanding both, capital planning became a guessing game.

    The hard truth: Most organizations track either condition or depreciation—but rarely both in a unified system. This creates blind spots where physical reality and financial records diverge, leaving leadership without the complete picture needed for confident capital decisions.

    Why Organizations Need Both Perspectives

    The challenge isn't choosing between FCI and depreciation—it's understanding when to use each metric and how they complement each other:

    FCI (Condition)

    Operations-focused: Tracks physical deterioration, maintenance backlog, and facility health. Answers: "What needs fixing and when?"

    Depreciation (Value)

    Finance-focused: Tracks asset book value, tax obligations, and financial reporting. Answers: "What's the accounting value over time?"

    Organizations that track both metrics gain a 360-degree view: understanding not only which assets need attention but also how to align capital investments with financial reporting requirements and CAPRA accreditation standards.

    Understanding the Fundamental Difference

    FCI and Depreciation aren't competing metrics—they're complementary lenses for viewing the same assets through operational and financial perspectives.

    Facility Condition Index (FCI)

    Formula
    FCI = Deferred Maintenance Cost / Current Replacement Value
    What It Measures:
    • Physical condition of assets based on lifecycle completion
    • Maintenance backlog (assets past end-of-life)
    • Facility health as a ratio (0.00 to 1.00)
    Primary Users:
    Facility Managers
    Operations Directors
    Asset Planners
    Key Question Answered:

    "What percentage of my facility needs immediate replacement to maintain operations?"

    PP&E Depreciation

    Formula
    Annual Depreciation = (Cost - Salvage Value) / Useful Life
    Net PP&E = Gross PP&E - Accumulated Depreciation
    What It Measures:
    • Financial book value of assets over time
    • Accounting expense allocation across asset lifecycle
    • Balance sheet positioning for audited financials
    Primary Users:
    Finance Directors
    CFOs
    Auditors
    Key Question Answered:

    "What's the current book value of our assets for financial reporting and tax compliance?"

    Same Asset, Different Perspectives: A Real Example

    Consider a commercial HVAC chiller installed in a recreation center:

    Purchase Year:
    2005
    Purchase Cost:
    $85,000
    Expected Life:
    20 years
    FCI Perspective (Operations)
    Current Year:2025
    Asset Age:20 years
    Lifecycle Completion:100% ⚠️
    Current Replacement Value:$108,700 (inflation-adjusted)
    Status:Counts as Deferred Maintenance

    Operations view: This chiller is at end-of-life and needs replacement. It's driving up the building's FCI score and should be in the capital replacement plan.

    Depreciation Perspective (Finance)
    Gross PP&E (Original Cost):$85,000
    Annual Depreciation:$4,250 ($85K / 20 years)
    Accumulated Depreciation:$85,000 (20 years × $4,250)
    Net PP&E (Book Value):$0

    Finance view: This asset is fully depreciated with zero book value. It no longer appears as an asset on the balance sheet, though it may still be operational. Replacement cost is a new capital expense.

    Why Both Matter: FCI tells operations "replace this now" while depreciation tells finance "this has zero book value." Without both views, you either over-maintain (replacing assets with book value remaining) or under-maintain (running equipment with no financial value that's operationally critical).

    When to Use FCI vs. Depreciation

    Use FCI (Condition-Based) When You Need To:

    Prioritize Capital Investments

    FCI reveals which buildings or systems are in worst condition and need immediate funding. Compare FCI scores across sites to allocate limited capital budgets where they'll have the greatest impact on facility health.

    Justify Maintenance Budgets to Leadership

    Present objective data showing "Our FCI is 0.15 (Poor) with $2.4M in deferred maintenance" instead of subjective pleas for more funding. FCI provides board-ready metrics that translate physical needs into financial terms.

    Benchmark Against Industry Standards

    FCI is widely recognized in government, education, and healthcare. Compare your scores to peer organizations (0.05 = Good, 0.05-0.10 = Fair, >0.10 = Poor) and demonstrate performance to auditors and stakeholders.

    Plan Proactive Replacements

    10-year FCI forecasts show when assets will reach end-of-life, allowing you to budget years in advance instead of reacting to failures with emergency funding requests.

    Use Depreciation (Financial) When You Need To:

    Prepare Audited Financial Statements

    GAAP and GASB require depreciation tracking for balance sheets and income statements. Track Gross PP&E, Accumulated Depreciation, and Net PP&E to comply with accounting standards and satisfy external auditors.

    Calculate Tax Obligations

    Depreciation expense reduces taxable income. Straight-line, double-declining, or MACRS methods determine annual deductions. Accurate depreciation tracking ensures tax compliance and maximizes allowable deductions.

    Meet CAPRA Accreditation Standards (Parks & Recreation)

    Commission for Accreditation of Park and Recreation Agencies (CAPRA) requires agencies to track asset depreciation for facilities, equipment, and infrastructure. Depreciation reporting demonstrates financial accountability and asset lifecycle management.

    Forecast Financial Statements

    Project future balance sheets by modeling depreciation schedules. See how Net PP&E will decline over 10-20 years and plan capital investments to maintain target asset values for stakeholder reporting.

    The Power of Tracking Both: A Unified View

    Most CMMS platforms force you to choose: track condition OR track depreciation. AssetLab is different—it calculates both metrics simultaneously from the same asset data, giving you:

    Operations Dashboard with FCI

    View real-time facility condition scores, deferred maintenance costs, and 10-year forecasts. Perfect for facility managers planning capital projects.

    Default View

    Finance Dashboard with Depreciation

    Toggle to PP&E view showing Gross PP&E, Accumulated Depreciation, and Net Book Value. Perfect for CFOs preparing financial statements.

    One-Click Toggle
    Real-World Benefit:

    When that recreation director returns to the budget hearing, they can now show:

    • FCI of 0.18 (Poor): $1.2M in facilities past end-of-life need replacement
    • Net PP&E of $2.8M: Current book value per GASB standards for balance sheet
    • Clear explanation: "Assets can have book value but still need replacement. The $2.8M shows accounting value; the FCI shows operational needs."

    Result: Council approves the full $1.2M request because they understand both the financial position AND the operational reality.

    How AssetLab Calculates Both Metrics Automatically

    From a single asset inventory, AssetLab generates both FCI and depreciation views automatically—no duplicate data entry, no separate systems.

    1

    Collect Core Asset Data (Once)

    Enter standard asset information—both metrics derive from the same fields:

    For FCI Calculation:
    • • Purchase Cost (for CRV with inflation)
    • • Purchase Date (for asset age)
    • • Expected Lifetime Years (for lifecycle %)
    For Depreciation Calculation:
    • • Purchase Cost (Gross PP&E)
    • • Purchase Date (for years in service)
    • • Expected Lifetime Years (useful life)
    • • Salvage Value (optional, defaults to $0)

    Same core fields power both calculations—no separate data entry required.

    2

    Calculate FCI (Condition View)

    AssetLab automatically calculates FCI using lifecycle tracking:

    1. Inflate purchase cost to current valueCRV = Cost × (1 + inflation)years
    2. Calculate lifecycle completionLifecycle % = (Age / Expected Life) × 100
    3. Identify deferred maintenanceIf lifecycle ≥ 100%, add to backlog
    4. Calculate FCI ratioFCI = Deferred Cost / Total CRV
    3

    Calculate Depreciation (Financial View)

    In parallel, AssetLab calculates straight-line depreciation for PP&E reporting:

    1. Set Gross PP&EGross PP&E = Purchase Cost
    2. Calculate annual depreciationAnnual = (Cost - Salvage) / Life
    3. Accumulate over timeAccumulated = Annual × Years
    4. Calculate Net PP&ENet = Gross - Accumulated
    4

    Toggle Between Views Instantly

    In Settings → Asset Metrics, administrators choose which view to display on the dashboard:

    FCI Mode
    Default

    Dashboard shows:

    • • Site/Building/System FCI Scores
    • • 10-Year FCI Forecast Chart
    • • Deferred Maintenance Costs
    • • Current Replacement Values
    Depreciation Mode
    Finance View

    Dashboard shows:

    • • Site/Building/System Net PP&E
    • • 10-Year Net PP&E Forecast Chart
    • • Gross PP&E Values
    • • Accumulated Depreciation

    Switch views anytime without losing data—both calculations run continuously in the background.

    Real Organizations Using Both Metrics

    Municipal Recreation Department

    Challenge: Parks and recreation agency pursuing CAPRA accreditation needed both depreciation tracking (CAPRA requirement) and facility condition monitoring (operational need).

    AssetLab Solution:

    • Finance team uses Depreciation view: Exports Net PP&E reports for CAPRA documentation and annual audited financial statements
    • Operations team uses FCI view: Tracks facility condition across 12 recreation centers, prioritizes HVAC and roof replacements
    • Board presentations show both: "Facilities have $4.2M Net PP&E (balance sheet) but FCI of 0.14 indicates $680K in deferred maintenance"

    Result: Achieved CAPRA accreditation with comprehensive depreciation documentation while maintaining real-time operational visibility through FCI tracking.

    K-12 School District

    Challenge: District CFO needed GASB-compliant depreciation for financial statements while facilities director needed condition data to justify bond funding for renovations.

    AssetLab Solution:

    • CFO generates depreciation schedules: Exports 10-year forecasts showing Net PP&E declining from $28M to $19M without capital investment
    • Facilities director presents FCI data: Shows 6 schools with FCI > 0.15 (Poor) needing $4.8M in HVAC and roofing work
    • Bond proposal combines both views: Financial projections (depreciation) + operational needs (FCI) in unified narrative

    Result: $12M bond measure passed with 68% approval after community saw both financial stewardship (accurate depreciation) and facility realities (FCI scores).

    Private University

    Challenge: University board questioned why facilities requested $3.2M in capital funding when audited financial statements showed $8.4M in campus PP&E.

    AssetLab Solution:

    • Presented side-by-side comparison: "Our $8.4M Net PP&E represents accounting book value. Our FCI of 0.19 means 38% of current replacement value needs attention."
    • Showed asset-by-asset breakdown: Main Hall chiller: $0 book value (fully depreciated) but $420K replacement cost due to condition
    • Educated board on the difference: Depreciation tracks financial value; FCI tracks operational reality

    Result: Board approved full $3.2M capital request after understanding that book value and replacement need are independent metrics.

    The Benefits of Dual-Metric Tracking

    For Facility & Operations Teams

    • Speak finance's language: Translate operational needs into financial terms executives understand
    • Justify capital requests: Show both condition data (FCI) and financial context (depreciation)
    • Prioritize with confidence: Use FCI for operational decisions while understanding financial implications

    For Finance & Executive Leadership

    • Meet compliance requirements: Depreciation tracking for GAAP, GASB, CAPRA, and audit standards
    • Understand operational reality: See beyond book values to actual facility condition
    • Make informed decisions: Balance financial position with operational needs

    For Boards & Stakeholders

    • Complete transparency: Understand both financial health AND facility condition
    • Confident capital approval: See how investments impact both metrics
    • Demonstrate stewardship: Show accurate financial reporting AND proactive facility management

    For Asset & Capital Planners

    • 10-year forecasts for both: See FCI deterioration AND Net PP&E decline simultaneously
    • Model scenarios: See how replacement investments improve FCI while maintaining PP&E value
    • Optimize timing: Plan replacements when assets are both depreciated AND past end-of-life

    Built for Financial & Operational Excellence

    AssetLab's dual-metric system follows both facility management best practices AND accounting standards:

    Industry-Standard FCI

    APPA, TEFMA, and IFMA methodologies for condition assessment. Inflation-adjusted replacement values and lifecycle-based deferred maintenance identification.

    GAAP & GASB Compliant Depreciation

    Straight-line depreciation with optional salvage values. Tracks Gross PP&E, Accumulated Depreciation, and Net PP&E for audited financial statements.

    CAPRA Accreditation Support

    Commission for Accreditation of Park and Recreation Agencies requires depreciation tracking. AssetLab provides exportable reports for accreditation documentation.

    Real-Time Synchronized Updates

    Both FCI and depreciation recalculate automatically as assets age—no manual updates, no synchronization delays between operational and financial views.

    Stop Choosing Between Metrics. Track Both.

    AssetLab gives you operational visibility through FCI tracking, financial compliance through depreciation, and unified capital planning that bridges operations and finance.

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